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Suppose that shares of firm A ( it does not pay dividends ) are trading at $ 2 5 per share. The ROA and ROE,

Suppose that shares of firm A (it does not pay dividends) are trading at $25 per share. The ROA and ROE, based on book values, are 7.3% and 11.2% respectively. The firms equity beta is 1.3, tax rate is 22%, it has 20 million shares outstanding, total debt outstanding is $100 million (it just issued bonds paying interest semiannually at 8% per year and having a yield to maturity of 9.8% per year). One-year risk free Treasuries are yielding an annual return of 5%. Investors expect the stock market to return 10.5% per year. What is the firms WACC, weighted average cost of capital?

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